It was another positive month for the Australian share market, with the S&P/ASX 200 Index gaining by 2.6% to close the month at 8,973.1 points. The Australian dollar gained by 1.6% over August, with 1 Australian Dollar currently buying 65.5 United States cents.
Global share markets once again had a positive month of returns, with the United States S&P500 Index gaining by 1.5%, the London FTSE Index gaining by 0.1%, the Japan Nikkei 225 Index gaining by 4.0%, and the Hong Kong Hang Seng Index gaining by 1.2% over the month.
The Reserve Bank of Australia (RBA) board met market expectations in August by cutting the Cash Rate by 0.25% per annum to 3.60% per annum. A higher-than-expected inflation reading late in the month has reduced the chances of a further RBA rate cut when the RBA board meet in September.
From 1 October, the Australian Government is expanding its 5% deposit home loan scheme to make home ownership more accessible for first-home buyers. This change removes previous restrictions such as income caps and limited places, opening the scheme to all eligible buyers regardless of earnings or the number of applicants.
It also introduces higher property price caps across capital cities to reflect current market conditions, with Sydney’s cap rising to $1.5 million and other cities like Brisbane, Melbourne, and Canberra also seeing significant increases as shown in the chart below.
The scheme allows first-home buyers to purchase a property with just a 5% deposit, while the government guarantees the remaining 15% of the standard 20% deposit. This guarantee means buyers can avoid paying Lenders Mortgage Insurance (LMI), which can otherwise cost tens of thousands of dollars.
With over 30 participating lenders, including major banks, the scheme is widely accessible. Buyers can apply through their chosen lender, and once approved, they can proceed with purchasing a property under the new, more generous terms.
This expansion represents a major shift in housing policy, aiming to ease affordability pressures and support more Australians in achieving the goal of owning their first home. It will also be interesting to see the impact that it has on house values – as it is expected to boost demand given the previous major limitation being the difficulty in obtaining a 20% deposit.
If you have any questions, please contact us on 1300 856 338.
This article is general information only and is not intended to be a recommendation. We strongly recommend you seek advice from your financial adviser as to whether this information is appropriate to your needs, financial situation, and investment objectives.